Example 5: Where Redundancy Is Involuntary

Telephone:

Claim Number:

Attention:

Safety, Rehabilitation and Compensation Act 1988

re:

I refer to your request of for advice from Comcare concerning the possible effect of an offer of an involuntary redundancy to the above employee.

Involuntary redundancies usually mean that incapacity entitlements will continue for as long as liability exists, even though the employee has separated from employment.  Therefore, acceptance of a redundancy package is likely to have a significant effect on the Commonwealth's liability and therefore the future premiums of your agency under the Safety, Rehabilitation and Compensation Act 1988 (SRC Act).

An involuntary redundancy may also trigger an incapacity entitlement where one currently does not exist.  If, for example, an employee's compensable condition results in permanent work restrictions, there is potential for the employee to be deemed totally incapacitated and therefore entitled to total incapacity payments after separation.  Such an entitlement could continue until they reach 65.

In determining whether the employee is entitled to total incapacity benefits after separation, Comcare is guided by s19 of the SRC Act.  Sub-section 19 (2) provides that Comcare is liable to pay compensation of an amount that is the difference between the employee's normal weekly earnings (NWE) and the amount per week that the employee is able to earn in suitable employment.

Please note that in these circumstances, for compensation purposes, 'suitable employment' can only be with the Commonwealth.  If the compensable condition is likely to prevent the employee from obtaining suitable employment, then the employee may be entitled to claim total incapacity payments.

All costs relating to this claim, including payments after they separate from your employment, will continue to be recorded as part of the claim performance of your agency and will increase future premiums of your agency.

This claim will of course be kept under review and in the event that the compensable condition improves, Comcare will then examine the possibility of a return to work in suitable employment.  While the employee is certainly able to seek employment outside the Commonwealth, only the earnings from suitable employment, i.e. employment with the Commonwealth, can be taken into account in calculating incapacity entitlements.

As payment of a redundancy package will affect the level of compensation entitlements payable, it is important that you notify the employee of the fact that redundancy may affect compensation entitlements and that you notify Comcare immediately of any decision to offer a package to ensure that all entitlements can be calculated in a timely and accurate manner. Incapacity payments following separation can be calculated once we receive the following information:

• the nature of the redundancy;

• the structure of the payment package;

• receipt of the employee's superannuation payment details;

• the timing (dates) for payment and separation.

It is also important to note that any case management and rehabilitation of this employee remain the responsibility of the employing agency, even following separation.

If you have any questions relating to this claim, please call on or write to Comcare quoting the claim number stated above.

Comcare Claims Management Centre